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prepare journal enteries

prepare journal enteries

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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prepare journal enteries?

**Differences in Pretax Financial Income and Taxable Income** The table below illustrates how the pretax financial income of Truttman Company differs from its taxable income over a period of four years: | Year | Pretax Financial Income | Taxable Income | Tax Rate | |------|-----------------------------|----------------|----------| | 2020 | $290,000 | $180,000 | 35% | | 2021 | $320,000 | $225,000 | 20% | | 2022 | $350,000 | $260,000 | 20% | | 2023 | $420,000 | $560,000 | 20% | **Explanation:** - The pretax financial income for each year includes a nondeductible expense of $30,000, which is not deductible for tax purposes. - The remainder of the difference between pretax financial income and taxable income each year is due to a single depreciation temporary difference. - No deferred income taxes existed at the start of 2020. **Instructions for Journal Entries:** - Prepare journal entries to record the income taxes for each of the four years. - Assume the tax rate change to 20% was not enacted until the start of 2021. **Note:** - Credit account titles should be automatically indented when the amount is entered. Do not indent manually. - If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.
Transcribed Image Text:**Differences in Pretax Financial Income and Taxable Income** The table below illustrates how the pretax financial income of Truttman Company differs from its taxable income over a period of four years: | Year | Pretax Financial Income | Taxable Income | Tax Rate | |------|-----------------------------|----------------|----------| | 2020 | $290,000 | $180,000 | 35% | | 2021 | $320,000 | $225,000 | 20% | | 2022 | $350,000 | $260,000 | 20% | | 2023 | $420,000 | $560,000 | 20% | **Explanation:** - The pretax financial income for each year includes a nondeductible expense of $30,000, which is not deductible for tax purposes. - The remainder of the difference between pretax financial income and taxable income each year is due to a single depreciation temporary difference. - No deferred income taxes existed at the start of 2020. **Instructions for Journal Entries:** - Prepare journal entries to record the income taxes for each of the four years. - Assume the tax rate change to 20% was not enacted until the start of 2021. **Note:** - Credit account titles should be automatically indented when the amount is entered. Do not indent manually. - If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.
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